Aurelian Oil & Gas ups Voitinel gas-in-place estimate to 400 bcf

Aurelian Oil & Gas (AIM: AUL) announced an upgrade to the gas-in-place estimate for the Voitinel gas project in Romania today and recapped its progress in 2009, including increased production volumes and revenues and successful capital raisings to remove the financing risk that was weighing on the share price.

The highlights of 2009 included increases in production volumes and revenues, which increased to 956.5 MMscf (million standard cubic feet) - or 2.62 MMscf/d (million standard cubic feet per day) of gas - and €3 million respectively, compared to 516.5MMscf, 1.42MMscf/d and €1.9 million in 2008.

In Romania, the company has upgraded the potential in the Voitinel appraisal asset GIIP (gas initially in place) from 50-100 bcf (billion cubic feet) to 400 bcf. Forecast production for the Bilca gas project in the country is expected to increase by 18% over the next seven years with the spudding of the Climauti-1 well set for April 2010.

The company has also advanced its project in Slovakia, where recent seismic processing and interpretation has identified further prospective leads on top of the €136 million Smilno gas exploration prospect, and Poland, where Aurelian signed key engineering, procurement and construction management services and drilling contracts for its key Siekierki gas project to firm up the June 2010 spud date for the first horizontal well.

Additional seismic in Slovakia is planned for this year, while drilling is planned for 2011.

Europa Oil & Gas (AIM: EOG), which holds a 28.75% interest in the Brodina block, in a separate statement welcomed Aurelian 's gas-in-place upgrade, saying this "reaffirms the significant resource potential in the central part of the Brodina Block as initially indicated by Voitinel-1... Europa's working interest in Brodina therefore has the near-term potential to become an extremely valuable asset for the company.”

Last month, Aurelian announced share issue plans to raise €39 million to fund the Siekierki well and up to seven exploration and appraisal wells in Eastern Europe in the next two years with the targeted assets valued at €1.2 billion. Funding remained a concern as prior to the share issue announcement, broker Jefferies estimated the net capex (capital expenditure) for the next two years at €87 million, of which €76 million remained unfunded.

“... we set out a new strategy and a series of milestones against which we could be measured. This operational update records steady progress against all the targets we set out. We have refocused the company on core areas, added technical and operating capability at the board and executive levels and, through our successful €39 million capital raise, removed the financing risk that was depressing our share price... 2010 is the year of opportunity for Aurelian as we aim to deliver on our flagship Siekierki tight gas project and drill our first of many high impact Carpathian exploration wells,” said Aurelian chief executive Rowen Bainbridge.

In 2011 activity will be stepped up with Aurelian likely to drill the Zarszyn prospect, which has a gross resource of 119 mmbbl, Mszana Dolna South with a gross resource of119 mmbbl and Smilno with a gross resource of 810 bcf. Jefferies estimated the total targeted prospective resource at 300 mmboe (million barrels of oil equivalent) with an unrisked upside of 539 pence.

The broker upped the target price for the stock to 58 pence in December, compared to the current share price of 38 pence.